Every small business has a smattering of expenses to account for and budget for. Rent, utility bills, and office supplies are common and, when totalled together, aren’t insignificant.
For example, in 2019, real estate agents spent 1.3 per cent of their total revenue on rent and another 1.3 per cent on utility bills. These percentages may appear small, but when every dollar counts, it’s important to keep as much of your revenue as possible. As you scale, those small percentages come to represent not-so-small dollar amounts.
Fortunately, many small business expenses may be claimed and written off as tax deductions. The Canada Revenue Agency (CRA) allows businesses to deduct business expenses when they incur to earn income.
But before you reduce your tax obligation, it’s important to understand what qualifies as a deductible business expense and how to record and claim business expenses in Canada.